Note: This “think piece” is designed to stimulate your thinking about workforce productivity.
Unfortunately, the pandemic has further softened HR to no longer focus on workforce productivity. I call this disturbing trend “the softening of HR” because instead of workforce productivity, numerous soft issues have become the dominant HR issues. To illustrate the point, one recent HRExecutive survey that was designed to identify what factors keep HR up at night. The survey literally makes no mention of workforce productivity as a strategic challenge. Instead, the “up at night” topics of concern included numerous “soft issues,” including morale, BLM, well-being, and the employee experience. I label these areas as soft because they have no clear definition or no numerical measure of success.
And most importantly, no proven cause-and-effect relationship with increased productivity at your organization. With this continuing drift away from what I consider to be our primary business goal, increasing the productivity of our workforce. I regrettably find that most HR functions are becoming less businesslike every day. In fact, I find it disturbing that, unlike every other “corporate resource” like finance, marketing, and production. The “corporate resources” that we oversee (i.e., the human resources) have no single strategic output, efficiency, or ROI measure. Obviously, from a business perspective, not having increasing workforce productivity (the value produced by employees minus their costs) as a primary strategic performance metric is troubling.
The Difference In Workforce Productivity Can Be Breathtaking
I’ve recently written about workforce productivity comparisons. And it’s clear that some organizations like Apple produce up to nine times higher workforce productivity than, for example, their well-branded competitor IBM. So, consider the possibility that when it comes to workforce productivity, continuing to ignore it may soon eliminate any chance you have of catching up.
The Pandemic Has Decreased Workforce Productivity
And to make matters worse, the pandemic may have downgraded the productivity issue even further. Because only looking at the topics in the subject line of your external email every day. It’s easy to see that HR professionals and vendors’ focus has clearly shifted towards important, but soft, issues like happiness, mental health, and engagement. The pandemic has also clearly had a significant negative impact on corporate workforce productivity. Garton and Mankins’ recent research published in the Harvard Business Review estimates that since the pandemic, most organizations “have experienced a net reduction in productivity.” So that the latest result is that the best organizations “were previously 40% more productive than the rest before the pandemic. But now “they may be greater than 50% more productive.”
Explaining Why You Are Ignoring Workforce Productivity May Be Difficult
Think about it for a minute. If your organization’s senior executives knew about this dramatic differential in workforce performance between organizations. They would expect their own HR leaders to know their own productivity levels and which factors have the most impact on productivity (e.g. managing scarce time, talent, and energy). And then they would want to know what their own HR department was currently doing to better manage those productivity impact factors. For most in HR, having to explain how little they know about increasing workforce productivity would, by itself, be stressful and even embarrassing.
Business Haters Don’t Like Productivity
After decades in the field, I regrettably find that HR is full of professionals, consultants, and union supporters that I classify as “business haters.” And those haters often view any mention of productivity, no less any attempt to increase it, as the first step in creating an oppressive employee sweatshop. They falsely assume that an increase in productivity automatically means more work, more stress, and more employee abuse. When, in fact, in the US, the opposite is most likely to be true. With increasing productivity, managers have more resources available to provide higher wages and benefits and hire additional workers. Yes, historically, they could “take the productivity money and run.” However, in today’s job market, a damaged Employer Brand has many negative recruiting and productivity impacts. That harsh approach no longer makes economic sense.
8 Action Steps For Increasing HR’s Focus On Workforce Productivity
Once you accept the fact that some organizations produce dramatically higher workforce productivity. You should become highly competitive and decide that you want to catch up. Start by beginning the process of identifying which individual productivity impact factors (like recruiting and retention) have the highest impact on increasing workforce productivity in your organization. As part of that process, here are some action steps that you should consider:
- Make it the #1 goal – work with your organization’s senior executives to select a single workforce productivity measure (cents of profit per dollar of employee costs or revenue per employee). And then make it HR’s top strategic goal to increase your productivity under that metric by at least 5% each year. And to eventually have the highest workforce productivity ratio in your industry.
- Put someone in charge of it – accountability leads to success. So, make a single HR executive accountable for workforce productivity. And expect them to quickly become an expert in the factors that impact productivity. Also, make it their job to improve and report productivity increases.
- Start with a focus on the 3 highest productivity impact areas identified by Garton and Mankins – overall, the three areas that their research indicates will generally have the highest impact on productivity are managing talent, managing scarce time, and increasing energy.
- Managing talent – you can have the most impact on “difference-making talent” by focusing on recruiting, retention, increasing innovation, internal movement and placement, self-directed learning, more effective leading, and identifying barriers to productivity.
- Increasing work time – increase the amount of time that employees actually spend both mentally and physically on productive work. By systematically reducing distractions and any time spent on nonproductive tasks, bureaucratic requirements, meetings, and communications. Unfortunately, HR traditionally does nothing in this area.
- Increasing employee energy – increasing the overall energy level of your employees by hiring and retaining purpose-driven and self-motivated employees. And then develop personalized plans for energizing your remaining employees. And finally increase everyone’s focus on productivity by measuring, recognizing, and rewarding it. Once again traditionally HR does nothing in this area.
- Shift to data-driven HR – follow Amazon and Google’s lead and shift to 100% data-driven decision-making within HR. And then focus on gathering data on workforce productivity and its causes. Learn to prove that HR programs increase workforce productivity by utilizing split samples.
- Prioritize the highest impact HR actions – learn to utilize “root cause analysis.” And once you identify the top five highest impact HR actions that directly cause an increase in productivity. At least for the next year, do not allow even the discussion of new or soft factors that are not unambiguously on that list.
- Change who you hire in HR – change the requirements for working in HR. And begin hiring only those with P&L business experience or business degrees.
- Shift from performance appraisal to performance counting – require the establishment of performance metrics covering output value and quality for every individual job. And then restrict performance appraisal to counting the employee’s actual performance with numbers and comparing it to expectations.
- Change your language to make it more businesslike – a colleague of mine recently left HR for a P&L department. And the biggest revelation was the startling difference in the language used by employees on the business side. So begin using business terms like ROI, productivity, competitive advantage and eliminate all “HR speak.”
I find it both surprising and disturbing that most HR functions don’t understand that every business function’s purpose is to maximize the output of the business area that they oversee. For example, finance has no difficulty in understanding that their job is to maximize the organization’s return on financial assets. And those managing the branding function all agree that their goal is to maximize the value and the impact of the product brand. But unfortunately, it doesn’t seem to be that apparent that the HR function should be maximizing the return on “human resources.” This means maximizing the output of the organization’s employees per dollar spent on them. So, it’s confusing to me why HR almost universally seems satisfied with running programs and providing HR services. Instead of focusing on demonstrating how they proactively caused productivity to increase. Perhaps our deliberate avoidance of performance-related areas like productivity, ROI, or performance metrics is a result of so many in HR not having Business degrees. Or because so many in HR joined it in order to “help people.”
When, in fact, we in HR exist in order to make employees more productive. It’s really that simple. Our role was to become experts in team and employee productivity. And to apply that knowledge so that our productivity continually increases faster than our competitors. Obviously, we need to do it in a positive way. An overly harsh approach will be counterproductive because it would harm and scare away our best assets, our employees.
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